Japanese insurers to discontinue sale of savings-type policies

Japanese insurers to discontinue sale of savings-type policies

Due to negative interest rates, Japanese non-life insurance companies will stop selling savings-type policies, according to reports.

In such policies, the insured pays the entire premium upon signing of the contract, and they are eligible for payouts for accidents and injuries until the end of the term, when the premium is returned almost in full.

However, the Bank of Japan’s decision to impose negative interest rates has forced insurers into a corner and severely limited their investment options.

Major Japanese non-life insurer Tokio Marine & Nichido Fire will stop offering savings-type products in October. Mitsui Sumitomo will also follow suit by April of next year, although policies for condominium boards may be exempted. Sompo Japan Nipponkoa has also ceased selling a similar plan.

The three mentioned insurers have a total of US$467m in premiums from savings-type products sold between March 2015 and March 2016.